Invensense Buys ADI's MEMS Mic Unit

PORTLAND, Ore. -- Invensense Inc. in San Jose, Calif. has agreed to purchase the MEMS microphone business line of Analog Devices Inc. (ADI) in Norwood, Mass. for $100 million in cash. Approximately 30 to 40 employees will move from ADI to Invensense as a result of the acquisition, but will remain in the Massachusetts area. Also remaining in place will be the MEMS microphone support operations in Bratislava, Slovakia and Shanghai, China.

Invensense, known for its inertial sensors with on-chip motion processing algorithms, claims to have already had MEMS audio microphones under development. By acquiring ADI's microphone business line, Invensense aims to fast-track progress, which it hopes will also open doors to new markets.

"We had audio microphones under development, but our acquisition of ADI's MEMS microphone business line will accelerate us down that roadmap," said Ali Foughi, vice president of marketing and business development at Invensense in an interview with EE Times. "And while mobile phones and tablets are our main targets today, they are not the only markets for MEMS microphones. This acquisition will also allow Invensense to enter two other major markets -- healthcare, including hearing aids, and the automotive market."

Much of Invensense's current success can be traced to its emphasis on supplying a complete systems-on-chip (SoC) that includes the MEMS element, the application specific integrated circuit (ASIC) that holds the electronics, plus the on-chip algorithms that perform the necessary sensor fusion. As such, Invensense's SoCs provide a complete end-to-end solution for its original equipment manufacturers (OEMs). Key to that strategy, according to Foughi, was expanding the breadth of its sensor offerings beyond just motion tracking.

"Audio is fast becoming complementary to motion as a means of interacting with future devices, which makes it key to our long-term growth in the SoC marketplace," said Foughi. "For new devices that provide more human-like interactions, audio is fast becoming a key element."

The potential market is huge, since analysts claim there will be 20 billion connected devices in the Internet of Things (IoT) by 2020, according to Foughi, who contends that the best way to achieve human-like interactions with all these devices is to complement motion tracking with other types of sensors.

"The Internet of Things is impacting every aspect of our lives -- mobile, wearable, home, enterprise, automotive, and industrial," said Foughi. "To meet the needs of all those applications, motion processing needs to be complemented by audio, video and environmental sensors that provide contextual awareness. This acquisition speeds us down that path."

Besides the $100 million in cash, Invensense has also agreed to make additional payments to ADI over the next 12 months if a set of undisclosed financial targets are met. Invensense will also assume undisclosed liabilities of ADI related to its microphone business, and may also record certain one-time transaction costs and purchased in-progress research and development costs in the fourth quarter of 2013. However, other than the one-time expenses, those costs are not expected to affect earnings for the balance of Invensense's fiscal year, which ends March 2014, and are expected to increase earnings thereafter.

Both boards-of-directions have already approved the transaction and stockholder approval is not required by either company. The transaction is expected to be closed by the end of this month.

MEMS requires different expertise, and uses different development tools, to craft these tiny mechanisms that adhere to different laws of physics, such as "stiction"--a measure of how much these tiny parts stick together.